Market Observation: Why Do Fast Fashion Brands Withdraw Their Stores One After Another?

With the rapid development of e-commerce in China, Fast fashion From the top of the slide, Forever21, new look and other brands have been one after another Withdraw from China 。

Since July, it has been popular among young people Fast fashion brand Zara, located on Heping Road, Tianjin, and HM, located at Binjiang Road crossing, closed their stores with ultra-low discounts. This is not the first wave of shop closures this year. As early as a few months ago, ESPRIT, once popular, announced on its official website: "due to the need for brand upgrading, Esprit's official shopping website will bid farewell to you for a period of time from May 31." Earlier, the parent company of GXG, which owns the rights to operate in mainland China, said Esprit would close all its stores in China.

Fast fashion used to be invincible in China for its high efficiency, high cost performance and high-speed store expansion, but now the "martial arts" of fast fashion "only fast but not broken" is gradually invalid in China. In addition to the problems of fast fashion brand itself, its situation in China is more due to the huge changes in China's consumer market. With the rapid and high development of e-commerce in China, fast fashion has begun to slide from the top, and brands such as Forever21 and new look have withdrawn from China.

Zara, H & M, gap and other brands are also in a bottleneck

On June 10, INDITEX, Zara's parent company, released its first quarter settlement, showing sales down 44% from a year earlier, with a net profit and loss deficit of 490 million euros. Although affected by the new coronavirus's going out and business ban, on the other hand, online sales in April increased by 95% compared with April last year. Affected by this, it was decided to close up to 1200 stores among the existing 7400 stores, including about 300 stores of "Zara". At present, it is mainly to close small-scale shops.

In the first quarter of 2020, gap, old , navy and other brands saw sales drop 43.1% to $2.107 billion (about RMB 14.902 billion), and a net profit loss of $932 million (about RMB 6.6 billion). The flagship store of British fast fashion brand Topshop tmall was officially closed at the end of 2018.

Optimize the product side and strengthen the omni channel layout

Focusing on the current market environment and consumption trend, the statistical data released by the National Bureau of statistics shows that, from the perspective of the eight categories of consumer spending, except for the growth of food and housing, the rest of the categories decreased, of which the clothing consumption expenditure decreased by 17.8% year-on-year. Affected by the epidemic situation, the consumption intention of residents decreased significantly, and the consumption structure showed the characteristics of rigid demand.

With the rapid development of domestic e-commerce, the impact on fast fashion is undoubtedly more and more fierce. Consumers not only like online shopping, but also pursue the experience of offline shopping. In this case, there must be a combination of online and offline channels. Foreign fast fashion brands with stores as the core obviously lack the advantages of online channels. Even if most of them have opened up online business, they mostly attract consumers with discount, and there are few other more interactive marketing methods.

The withdrawal of some international brands from the Chinese market is a signal of reshuffle in the fast fashion industry, that is, the restructuring of market order and market redistribution. In the context of the increasing number of fast fashion brands, Chinese consumers do not pay for simply copying the foreign model, which needs local transformation. Some enterprises that do not adapt to the local soil will be opened the gap in product and marketing, and then be eliminated. In the face of the rapid changes in the consumer market, fast fashion brands have made adjustments to their offline stores, leaving high-quality stores with both strength and pressure resistance, and actively recommending data-based management to minimize the risks of supply chain, storage and transportation, and inventory.

For the whole fast fashion industry, store closing and adjustment has long been the "normal". The road of fast fashion brands in the Chinese market is becoming more and more difficult. Those once popular brands "disappear" one by one in the Chinese market. In the future, fast fashion brands want to have a foothold in the market, and "changing face" will become an inevitable trend. Risk is opportunity, and opportunity always favors those who are prepared. The epidemic will bring about industry reshuffle and new social values and consumption trends.